Martin Shkreli and the Crisis of Corporate Conscience

A few months ago, BBC News suggested that “Martin Shkreli, the 32-year-old chief executive of Turing Pharmaceuticals, may be the most hated man in America right now.” That's because Turing, under Shkreli's watch, increased the price of a drug called Daraprim from $13.50 to $750 per tablet overnight. These skyrocketing costs were particularly galling given that Darapim, on the World Health Organization’s List of Essential Medicines, treats a parasitic infection that is dangerous (and potentially deadly) for pregnant women, the elderly, and people with HIV.

Following public outcry, federal authorities arrested Shkreli in December, forcing him to resign from Turing. At first blush, it sounds as though justice was served: prices were raised in an exploitative manner (on a drug to treat parasites, ironically), and the CEO of the wrongdoing company was brought to justice.

Not so.

As Forbes notes, the “Securities and Exchange Commission’s charges against Shkreli have nothing to do with the Daraprim pricing issue but are related to Shkreli’s alleged fraud committed at his former company Retrophin during a five-year period when he also was working as a hedge fund manager.” That’s because the “Daraprim pricing issue,” the overnight increase of a potentially life-saving drug by 5556%, appears to be perfectly legal. Laws prohibiting price gouging tend only to apply to “periods of emergency,” such as natural disasters.

Of course, saying that Turing’s actions were legal doesn’t mean that they were moral. Shkreli was called before the House Oversight Committee, where the Committee members repeatedly tried to appeal to his conscience. Rep. Jason Chaffetz asked him, “What do you say to that sick pregnant woman who might have AIDS, no income, she needs Daraprim in order to survive?” Rep. Elijah Cummings reminded him that he could “go down in history as the poster boy for greedy drug-company executives or… change the system.” Shrekli, for his part, simply smirked and pled the Fifth throughout.

It’s easy, and politically safe, to condemn Shrekli and Turing, but for supporters of the HHS Mandate, it’s also more than a little hypocritical. After all, Turing acted exactly as the HHS Mandate supporters have demanded, by acting as a corporation without a conscience.

It wasn’t long ago that the corporate villains du jour were those who had too much conscience, not too little. Perhaps the most (in)famous conscientious corporation is Hobby Lobby, the company at the heart of Burwell v. Hobby Lobby Stores, Inc.The Supreme Court noted in that case that each member of the family owning and operating the corporation has “signed a pledge to run the businesses in accordance with the family’s religious beliefs and to use the family assets to support Christian ministries.” This corporate conscience instills the corporation with a sense of serving a higher purpose than simply maximizing profits. As a result, they forgo millions of dollars annually by closing all of their stores on Sundays and by avoiding morally questionable business arrangements. It was this same corporate conscience that ran afoul of the HHS Mandate when Hobby Lobby refused to provide insurance coverage for drugs believed to be abortifacients.

Siding with the Obama Administration against Hobby Lobby, Justice Ruth Bader Ginsburg explained in her Hobby Lobby dissent that “corporations have no consciences, no beliefs, no feelings, no thoughts, no desires.” She admitted that “churches and other nonprofit religion-based organizations” also had Free Exercise protections, but claimed that this was only a “special solicitude,” not to be extended to for-profit corporations. That’s because “for-profit corporations are different from religious non-profits in that they use labor to make a profit, rather than to perpetuate the religious values shared by a community of believers.”

In other words, for-profit corporations (be they Christian bookstores or pharmaceutical companies) exist not to follow moral values, but to chase bottom lines. That’s not just one Justice’s cynical view of corporations. It’s the government’s legal argument explaining why it is okay to deny Free Exercise protections to for-profit corporations. If we adopt this view of corporations, we have no grounds upon which to object to men like Martin Shkreli or companies like Turing Pharmaceuticals.

Shortly before his arrest, Shkreli was asked if, given the chance, he would do anything differently. He answered, “I probably would have raised the price higher.” Why? Because that would have made more money, and “this is a capitalist society, capitalist system and capitalist rules. My investors expect me to maximize profits, not to minimize them, or go half, or go 70%.” These are precisely the principles by which the Obama administration and Justice Ginsburg argue that for-profit corporations must be run.

If Obama and Ginsburg are right on the HHS Mandate, it’s hard to see how Shkreli is wrong. After all, for him to have used his position as CEO to make Turing Pharmaceuticals do the morally-right thing at the expense of shareholders would seem to be the exact sort of corporate conscience to which the Mandate supporters object.

So the outraged public can’t eat their cake and have it, too. Either Hobby Lobby needs to be less conscientious, or Turing needs to be more so, but it can’t very well be both. Having spent the last few years demanding that for-profit corporations behave without consciences, we can hardly complain when we find them doing so.

Joe Heschmeyer is a seminarian for the Archdiocese of Kansas City in Kansas, studying at the Pontifical North American College in Rome.